IL&FS Transportation Networks - 4QFY2012 Result Update - Angel Broking

For 4QFY2012, on a consolidated basis, IL&FS Transportation Networks (ITNL) posted a strong set of numbers, which were ahead of our estimates on all fronts. This robust performance was on account of higher-than-expected revenue growth, led by E&C revenue. However, the fall in EBITDAM and high interest cost prevented top-line growth to flow to the bottom-line level. We are revising our estimates to factor in 4QFY2012 performance. We maintain our Buy recommendation on the stock.

Robust performance continues: For 4QFY2012, ITNL's revenue for the quarter came in at Rs.1,989cr (Rs.1,656cr), registering 20.1% yoy/56.8% qoq growth, significantly higher than our estimate of Rs.1,507cr. This was mainly on account of increased contribution from the E&C segment. EBITDA margin for the quarter stood at 23.0% vs. 24.8% in 4QFY2011, down 180bp yoy and 230bp qoq, respectively, against our estimate of 24.8%. ITNL's interest cost during the quarter grew by 28.9% yoy/24.5% qoq to Rs.231cr, ahead of our expectation of Rs.200cr. On the earnings front, ITNL reported 11.4% yoy growth to Rs.177cr, higher than our estimate of Rs.111cr on the back of strong revenue growth.

Outlook and valuation: During the quarter, ITNL bagged road BOT projects worth Rs.4,948cr, taking its order book to Rs.12,057cr (OB of 4.3x FY2012 standalone revenue), thus putting the concern on order inflow to rest. Hence, going ahead, the company would focus on the execution of these projects. We have valued ITNL on an SOTP basis by assigning 5.0x EV/EBITDA to its standalone business and have valued its investments on DCF/Mcap/BV basis on FY2014E to arrive at a target price of Rs.265/share. Hence, we maintain our Buy view on the stock.

Source : Equity Bulls

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